This is a shareholder derivative action brought pursuant to Rule 23.1 of the Federal Rules of Civil Procedure for recovery by and on behalf of Loral Space and Communications, Ltd. Loral Space and Communications, Ltd. is named as a defendant because it is an indispensable party for procedural reasons, the recovery sought in this action being for the benefit of Loral Space and Communications, Ltd.

PARTIES

Plaintiff W. L. Meng ("Meng") is a resident and citizen of the Commonwealth of Virginia and, as a Co-Trustee under the Last Will and Testament of Ralph Harvey Meng, who died on October 2, 1995 and whose will was probated before the Register of Wills in Queen Anne’s County, Maryland (Estate No. 6634) on October 12, 1995, is a shareholder of Defendant Loral Space and Communications Ltd.

Plaintiff S. S. Jones, Jr. ("Jones") is a resident and citizen of the State of Maryland and, as a Co-Trustee under the aforesaid Last Will and Testament of Ralph Harvey Meng, deceased, is a shareholder of Defendant Loral Space and Communications Ltd.

Plaintiffs Roy S. Gillinson, M.D. and Joan Monica Gillinson, husband and wife, are residents of the Commonwealth of Virginia and are shareholders of Defendant Loral Space and Communications Ltd.

Defendant Bernard Schwartz ("Schwartz") is a resident and citizen of the State of New York. Defendant Schwartz is Chairman of the Board and Chief Executive Officer of Defendant Loral Space and Communications Ltd.

Defendant Loral Space and Communications Ltd. ("Loral") is incorporated under the laws of Bermuda and has its principal place of business in New York, New York.

Defendant DNC Services Corporation, d/b/a/ The Democratic National Committee ("DNC"), is incorporated under the laws of the District of Columbia and has its principal place of business at 430 South Capitol Street, S.E., Washington, DC 20003.

Defendant Democratic Senatorial Campaign Committee ("DSCC") is incorporated under the laws of the District of Columbia and has its principal place of business at 430 South Capitol Street, S.E., Washington, DC 20003.

Defendant Democratic Congressional Campaign Committee ("DCCC") is incorporated under the laws of the District of Columbia and has its principal place of business at 430 South Capitol Street, S.E., Washington, DC 20003.

Defendant William Jefferson Clinton is President of the United States. Defendant William Jefferson Clinton is a citizen of the State of Arkansas and currently resides at 1600 Pennsylvania Avenue, N.W., Washington, DC 20500.

Defendant Hillary Rodham Clinton is the wife of Defendant William Jefferson Clinton and First Lady of the United States. Defendant Hillary Rodham Clinton is a citizen of the State of Arkansas and currently resides at 1600 Pennsylvania Avenue, N.W., Washington, DC 20500.

Defendant Albert Gore, Jr. is Vice-President of the United States. Defendant Gore is a citizen of the State of Tennessee. Defendant Gore’s Washington, DC office is located at 1600 Pennsylvania Avenue, N.W., Washington, DC 20500.

Defendant Harold Ickes is a citizen of the District of Columbia and resides at 3107 Dumbarton Street, N.W., Washington, DC 20007.

Defendant Melissa Moss is a citizen of the District of Columbia and resides at Apartment 2D, 1409 21st Street, N.W., Washington, DC 20036.

On information and belief, Defendant Alexis Herman is a citizen of the District of Columbia. Defendant Herman’s Washington, DC office is c/o the U.S. Department of Labor, 200 Connecticut Avenue, N.W., Washington, DC 20001.

Defendant Marvin Rosen is a citizen of the State of Florida and resides at 10 Tahiti Beach Island Road, Miami, FL 33143.

Defendant Terence R. McAuliffe is a citizen of the State of Virginia and resides at 7527 Old Dominion Drive, McLean, Virginia 22102.

Defendant Samuel R. Berger, also known as Sandy Berger, is a citizen of the District of Columbia and resides at 4228 45th Street, N.W., Washington, DC 20016.

Defendant John Huang is a citizen of the State of California and resides at 2100 Rimcrest Drive, Glendale, California 91207.

Defendants John and Jane Does Nos. 1-10 are currently unknown officials of Defendant Loral, the White House, the U.S. Department of Commerce, the DNC, the DSCC, the DCCC and/or other parties agreed to participate in and did participated in the conspiracy set forth in this Amended Complaint.

JURISDICTION AND VENUE

Jurisdiction over this matter is proper under 28 U.S.C. § 1331, as Plaintiffs assert claims arising under the laws of the United States.

Supplemental jurisdiction is also proper under 28 U.S.C. § 1367 because Plaintiffs assert various claims arising under state law that form the same "case or controversy" as Plaintiffs’ claims arising under federal law.

Venue is proper in this district pursuant to the provisions of 28 U.S.C. § 1391(a)(2) because a substantial part of the events or omissions giving rise to Plaintiffs’ claims occurred in the District of Columbia.

Venue is also proper in this district under 28 U.S.C. § 1401 because Defendant Loral could have brought suit against Defendant Schwartz in the District of Columbia.

DERIVATIVE ACTION ALLEGATIONS

Plaintiffs Meng and Jones are Co-Trustees under the Last Will and Testament of Ralph Harvey Meng, deceased, who, since October 1992, was the legal owner of 448 shares of common stock in Loral Corporation, the predecessor in interest of Defendant Loral.

Upon the admission to probate of the Last Will and Testament of Ralph Harvey Meng on October 12, 1995, Plaintiffs Meng and Jones became the owners of decedent Ralph Harvey Meng’s 448 shares of common stock in Loral Corporation.

In January 1996, Defendant Loral was incorporated in Bermuda to succeed to the space and telecommunications business of Loral Corporation, in conjunction with the acquisition of Loral Corporation by Lockheed Martin Corporation ("Lockheed Martin").

In April 1996, Loral Corporation distributed all of Defendant Loral’s shares to Loral Corporation shareholders on the basis of one share of Defendant Loral stock for each share of Loral Corporation stock. Plaintiffs Meng and Jones’ shares in Loral Corporation were thereby converted into 448 shares of common stock in Defendant Loral.

Defendant Loral is the successor in interest to Loral Corporation.

Plaintiffs Roy S. Gillinson, M.D. and Joan Monica Gillinson, husband and wife, have owned 1,000 shares of common stock in Defendant Loral since on or about November 8, 1996.

Plaintiffs bring this action on behalf of themselves, their beneficiaries and all other similarly-situated shareholders of Defendant Loral.

Plaintiffs, or Plaintiffs’ predecessor in title and interest, have owned shares of Loral Corporation and/or Defendant Loral at all times relevant to this action.

This action is not a collusive one to confer jurisdiction on a court of the United States that would not otherwise have jurisdiction.

Plaintiffs will fairly and adequately represent the interests of all other similarly-situated shareholders in enforcing the rights of Defendant Loral.

A demand on Defendant Loral and its directors would be futile because the acts alleged herein were, on information and belief, knowingly committed by Defendant Schwartz, who has controlled Defendant Loral and its predecessors in interest for approximately twenty-seven (27) years, or by other directors and officers of Defendant Loral and Loral Corporation under Defendant Schwartz’ influence and control.

A demand on Defendant Loral and its directors would also be futile because Defendant Loral, Defendant Schwartz and other representatives of Defendant Loral have repeatedly and publicly denied the acts alleged herein.

The company is cooperating fully with a Justice Department investigation and with the relevant congressional committees. Based upon its own review of the matter, SS/L does not believe that any of its employees dealing with China acted illegally or damaged U.S. national security.

Bernard Schwartz, Chairman of Loral Space & Communication Ltd., the parent company of SS/L, was not personally involved in any aspect of this matter. No political favors or benefits of any kind were requested or extended, directly or indirectly, by any means whatever.

Likewise, during several Sunday morning television appearances on or about May 24, 1998, Defendant Schwartz unequivocally denied any wrongdoing on his part or on the part of Defendant Loral. "I’m not going to be intimidated by this flap," Defendant Schwartz claimed.

In addition, during a television appearance on the Fox News Channel on or about October 30, 1998, Defendant Schwartz emphatically denied that Defendant Loral requested or received any political favors or benefits because of campaign contributions. Defendant Schwartz asserted: "It doesn’t work that way. That’s not the way the system works."

During this same television appearance, Defendant Schwartz emphatically denied any unlawful conduct or breach of national security. Schwartz stated: "[The U.S. Department of Commerce] didn’t do anything here, nor did we, that violated those rules. We were consistent with those rules."

Similarly, in a May 25, 1999 statement issued in response to a declassified report by the U.S. House of Representatives Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China ("the Cox Report"), Defendant Loral again denied any wrongdoing: "We remain convinced that we have not violated the law, that our employees acted in good faith and that we did not transfer sensitive information to the Chinese."

On May 26, 1999, Defendant Schwartz addressed a letter to "Loral employees, customers and shareholders" that challenged the conclusions of the Cox Report and again denied any wrongdoing. This letter was mailed to Defendant Loral’s shareholders.

On June 15, 1999, Defendant Loral caused full-page notices to appear in The Los Angeles Times, The New York Times, The San Jose Mercury News, Space News, The Wall Street Journal, and The Washington Post. These full-page notices were directed "To Loral Employees and Shareholders" and denied any wrongdoing. Defendant Loral subsequently mailed copies of this same notice to its shareholders.

In light of these and other unequivocal denials by Defendant Schwartz and Defendant Loral, any demand on the board of directors of Defendant Loral is futile.

FACTS

Defendant Loral is one of the world’s leading satellite providers, with substantial interest in the design, manufacture and operation of geosynchronous and low earth-orbit satellite systems.

Defendant Schwartz was Chairman of the Board and Chief Executive Officer of Loral Corporation from 1972 until January 1996.

Defendant Schwartz has been Chairman of the Board and Chief Executive Officer of Defendant Loral since January 1996.

In the early 1990s, Defendant Loral’s predecessor in interest, Loral Corporation, was attempting to gain access to the telecommunications market in China, where its chief U.S. competitor, Hughes Electronics Corp., was actively selling communications satellites and satellite services.

After William Jefferson Clinton was elected President of the United States in 1992, Ronald H. Brown, who had been Chairman of the DNC during the 1992 elections, became Secretary of Commerce.

Several DNC officials and fundraisers also accepted appointments and/or employment at the U.S. Department of Commerce ("Commerce Department") under Secretary Brown, including Melissa Moss, a former top DNC fundraiser who became the Director of the Commerce Department’s Office of Business Liaison ("OBL").

Other DNC officials, fundraisers and allies joined the White House Staff. Alexis Herman, for example became the White House Director of Public Liaison. She currently serves as the Secretary of the Department of Labor.

Under Secretary Brown, the Commerce Department sponsored a series of foreign trade missions, allegedly to promote U.S. business interests abroad.

During the course of these foreign trade missions, U.S. business leaders traveled overseas with Secretary Brown and other Commerce Department officials to meet with foreign business leaders and government officials.

These trade missions often resulted in lucrative business deals for U.S. businesses, or expanded business contacts that led to, or could lead to, future business deals.

On information and belief, in order to raise funds for President Clinton’s and Vice-President Gore’s reelection campaign, other Democratic candidates, and the Democratic Party, officials at the Clinton White House, the Commerce Department, the DNC, the DSCC and the DCCC devised, agreed to participate in, and implemented, with the knowledge and approval of President Clinton, Hillary Rodham Clinton and Vice-President Gore, a scheme to sell seats on taxpayer-financed foreign trade missions, and to secure other favorable treatment from the Clinton Administration, in exchange for contributions to the DNC, DSCC and DCCC ("the Scheme").

President Clinton and Vice-President Gore authorized, agreed to participate in, and implemented the Scheme, and met with U.S. business leaders going on Commerce Department trade missions before the trade missions departed. President Clinton and Vice-President Gore also accepted the benefits of the contributions generated by the Scheme.

Deputy White House Chief of Staff Harold Ickes, then-White House Director of Public Liaison Alexis Herman, OBL Director Melissa Moss, DNC Finance Chairman Marvin Rosen, and top DNC/Clinton-Gore fundraiser Terence R. McAuliffe, among others, including but not limited to John and Jane Does Nos. 1-10, also agreed to participate in the Scheme, and played central roles in selecting trade mission participants and, on information and belief, securing other favorable treatment from the Clinton Administration for Defendant Loral.

John Huang, who was Deputy Assistant Secretary for International Economic Policy at the Commerce Department before transferring to the DNC, also agreed to participate in the Scheme, and, with the assistance of other Commerce Department officials, including but not limited to Ginger Lew, Melinda Yee, Sally A. Painter, Jude Kearney, Laurie Fitz-Pegado, and Ira Sockowitz, participated in planning and implementing the Commerce Department’s trade missions to China and other countries.

The DNC also devised, agreed to participate in, and implemented the Scheme and provided assistance in selecting trade mission participants. For example, a January 13, 1994 memorandum from top DNC official Eric Silden, states:

[OBL Deputy Director] Sally Painter at Commerce called to ask for a list of candidates for a trade mission to Russia. She needs an initial list by tomorrow (Friday 1/94) of 20-30 names . . . . Ari will use the ‘Belgium trade mission list’ as a base of names, to be augmented by additional names that he feels are relevant to Russian trade. It was suggested that he contact Reta Lewis to determine which names on the Belgium list will be included in the delegation, so that they are not submitted to Commerce for the Russian delegation. . . . Bob will be the point contact with Commerce, as I will not be in the office on Friday afternoon to deliver the list to Sally.

According to a DNC brochure regarding its "Managing Trustees Program," individuals who contributed $100,000 to the DNC were "invited to participate in foreign trade missions, which affords opportunities to join Party leaders in meeting with business leaders abroad," among other perquisites.

On information and belief, the DSCC and DCCC also agreed to participate in the Scheme, and accepted funds from Defendant Schwartz.

Then-Deputy Assistant to the President for National Security Affairs Sandy Berger also agreed to participate in the Scheme, and played a central role in securing favorable treatment from the Clinton Administration for Defendant Loral. Defendant Berger, who would later become Assistant to the President for National Security Affairs, had previously worked as an international trade lawyer for the Washington, D.C. law firm of Hogan and Hartson, which represents the Chinese government in numerous international trade matters with respect to the U.S. Government. On information and belief, Defendant Berger had been the "point person" at Hogan and Hartson for the trade office of the Chinese government.

Defendant Schwartz Secures Seat on Commerce Department Trade

Mission to China and Business Agreements For Defendant

Loral After a $100,000 Contribution to the DNC

In June 1994, Defendant Schwartz made a $100,000 contribution to the DNC.

In the Summer 1994, Defendant Schwartz was selected to participate in the Commerce Department’s trade mission to China along with Secretary Brown and others.

On about August 3, 1994, prior to departing on the Commerce Department’s trade mission to China, Defendant Loral provided the Commerce Department with a list of Chinese business and government officials with whom Defendant Schwartz wished to meet during the trade mission.

Also in August 1994, prior to departing on the Commerce Department’s trade mission to China, Defendant Schwartz, and, on information and belief, other representatives of Defendant Loral, met with Secretary Brown to discuss products and technology that it wished to offer to the Chinese, how the U.S. Government could aid Defendant Loral and the U.S. satellite industry, and Chinese business and government officials with whom Defendant Schwartz wished to meet.

Briefing materials prepared by Defendant Loral for this meeting specifically identify what it was that Defendant Loral sought from the U.S. Government and the Commerce Department: "Remove technology transfer restrictions where unnecessary" and "permit occasional Russian or Chinese launch." These same materials also identify additional Chinese business and government officials with whom Defendant Schwartz wished to meet.

The Commerce Department trade mission to China took place from August 25, 1994 to September 2, 1994.

During the Commerce Department trade mission to China, Secretary Brown and, on information and belief, colleagues and agents of John Huang and others, helped to orchestrate one or more meetings between Defendant Schwartz and Chinese business and government officials.

On information and belief, as a result of Defendant Schwartz’ participation in the Commerce Department’s trade mission to China, Defendant Loral was able to negotiate and secure favorable business agreements for the launch of Defendant Loral’s commercial satellites aboard Chinese rockets.

On information and belief, Defendant Schwartz directly or indirectly offered and/or promised Defendants William Jefferson Clinton, Hillary Rodham Clinton, Gore, Ickes, Moss, Berger, Herman, Huang, John and Jane Does Nos. 1-10, and/or other currently unknown public officials, that he would make contributions to the DNC, DSCC, DCCC and/or other entities affiliated with the Democrats, with the intent to influence their official acts, including but not limited to: (1) securing a seat on the Commerce Department’s trade mission to China; (2) gaining access to Chinese business and government officials; (3) removing technology transfer restrictions; and (4) permitting Chinese launches of U.S. satellites, among other favorable treatment, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

On information and belief, Defendant Schwartz was selected to participate in the Commerce Department’s trade mission to China and thereby gained access to Chinese business and government officials at least in part due to his $100,000 contribution to the DNC, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

Defendant Schwartz’ Contributions to the Democrats Increase

Dramatically After His Participation in the

1994 Trade Mission to China

Defendant Schwartz admitted to Ruth Marcus and John Mintz of The Washington Post that the meetings Secretary Brown arranged for him during the trade mission "helped open doors that were not open before." ("Big Donor Calls Favorable Treatment a Coincidence," The Washington Post, May 25, 1998).

After the success of this initial effort to obtain favors from the Clinton Administration in exchange for campaign contributions, Defendant Schwartz reportedly admitted to Helene Cooper and Rick Wartzman of The Wall Street Journal, "I think that political involvement does enhance the visibility of a corporate executive, and to the extent that visibility is enhanced, access is enhanced as well." ("Traveling Pals: How Ron Brown Picks Who Joins His Trips Abroad Raises Doubts," The Wall Street Journal, September 9, 1994).

Defendant Schwartz also reportedly boasted to Susan B. Garland of Business Week, "I can open any door I want as chairman of a $6 billion company." ("Clinton Cozies Up to Business," Business Week, September 12, 1994).

On information and belief, in a 1994 memorandum to President Clinton, then Deputy White House Chief of Staff Harold Ickes recommended that President Clinton call Defendant Schwartz to solicit contributions from him for a multi-million dollar political advertising campaign. "I have it on good authority that Mr. Schwartz is prepared to do anything he can for the administration," Mr. Ickes reportedly wrote.

Defendant Schwartz subsequently made substantial, additional contributions to the DNC.

On April 24, 1995, Defendant Schwartz paid $25,000 to the DNC.

On June 30, 1995, Defendant Schwartz paid $75,000 to the DNC.

On September 30, 1995, Defendant Schwartz paid $20,500 to the DNC.

On November 28, 1995, Defendant Schwartz paid $100,000 to the DNC.

On June 10, 1996, Defendant Schwartz paid $100,000 to the DNC.

On October 18, 1996, Defendant Schwartz paid $70,000 to the DNC.

On December 20, 1996, Defendant Schwartz paid $6,000 to the DNC.

On June 27, 1997, Defendant Schwartz paid $100,000 to the DNC.

On December 23, 1997, Defendant Schwartz paid $50,000 to the DNC.

On January 21, 1998, Defendant Schwartz paid $30,000 to the DNC.

On March 2, 1998, Defendant Schwartz paid $25,000 to the DNC.

On April 22, 1998, Defendant Schwartz paid $100,000 to the DNC.

In addition, Defendant Schwartz also made substantial, additional contributions to other entities closely affiliated with the Democrats and the Democratic Party.

On June 30, 1995, Defendant Schwartz paid $20,000 to the DSCC, which raises funds for and assists Democrats running for the U.S. Senate.

On September 30, 1995, Defendant Schwartz paid $20,500 to the DSCC.

On February 15, 1996, Defendant Schwartz paid $15,000 to the DSCC.

On April 24, 1996, Defendant Schwartz paid $50,000 to the DSCC.

On July 31, 1996, Defendant Schwartz paid $5,000 to the DSCC.

On September 16, 1996, Defendant Schwartz paid $30,000 to the DSCC.

On September 20, 1996, Defendant Schwartz paid $20,000 to the DCCC, which raises funds for and assists Democrats running for the U.S. House of Representatives.

On October 16, 1996, Defendant Schwartz paid $10,000 to the DSCC.

On October 24, 1996, Defendant Schwartz paid $5,000 to the DSCC.

On January 31, 1997, Defendant Schwartz paid $50,000 to the DSCC.

On April 25, 1997, Defendant Schwartz paid $5,000 to the DCCC.

On July 14, 1997, Defendant Schwartz paid $50,000 to the DSCC.

On October 27, 1997, Defendant Schwartz paid $1,000 to the DCCC.

On December 15, 1997, Defendant Schwartz paid $10,000 to the DSCC.

On December 19, 1997, Defendant Schwartz paid $50,000 to the DCCC.

On or about May 21, 1998, Defendant Schwartz reportedly contributed $217,000 to the Democratic Leadership Conference, a "think tank" closely associated with President Clinton and the Democratic Party.

On August 14, 1998, Defendant Schwartz paid $100,000 to the DCCC.

On information and belief, from 1994 to 1998, Defendant Schwartz contributed at least $1,460,000 to the DNC and other organizations affiliated with the Democrats and the Democratic Party.

On information and belief, Defendant Schwartz negotiated and had paid to him, under Loral Corporation’s merger agreement with Lockheed Martin, a $36 million bonus that he used, among other forms of compensation, to reimburse himself for his unlawful contributions and to fund additional unlawful contributions.

On information and belief, Defendant Schwartz is the largest single contributor to the DNC and other organizations affiliated with the Democrats and the Democratic Party.

On information and belief, Defendant Schwartz directly or indirectly offered and/or promised Defendants William Jefferson Clinton, Hillary Rodham Clinton, Gore, Ickes, Moss, Berger, Herman, Huang, John and Jane Does Nos. 1-10, and/or other currently unknown public officials that he would make the additional contributions referenced in paragraphs 78 through 108, above, with the intent to influence official acts and obtain favors and/or favorable treatment from the Clinton Administration, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

On information and belief, Defendant Schwartz caused Defendant Loral to reimburse him for his unlawful contributions and to provide a source of funds for further unlawful contributions.

Defendant Schwartz Secures Favorable Ruling from President

Clinton Regarding Export Licensing for

Communication Satellites

Defendant Loral was, and is, developing a global cellular telephone network, known as "Globalstar," which will consist of forty-eight (48) satellites in low-earth orbit and eight (8) spare satellites, also in orbit.

Defendant Loral’s launch strategy for "Globalstar" contemplates using Chinese and Ukrainian launch providers, with launch sites in China and Kazakhstan, to place its satellites into orbit.

Under U.S. law (including the Arms Export Control Act, the International Traffic in Arms Regulations, and regulations issued by the Commerce Department) a private party wishing to launch a U.S. satellite from China must first obtain an export license to do so.

According to the Cox Report, these licenses limit the access that China can have to U.S. satellites, restrict the information that can be shared with the Chinese, and require that private parties develop and abide by a plan to protect controlled information from unauthorized disclosure.

Prior to 1996, the U.S. Department of State ("State Department") issued licenses for the launch of certain highly-sensitive, commercial communications satellites identified on the State Department’s U.S. Munitions List.

The Commerce Department issued licenses for other, less sensitive commercial communication satellites identified on the Commerce Department’s Control List.

On information and belief, the U.S. commercial communications satellite industry, including Defendant Loral, Hughes Electronics Corp. ("Hughes"), Lockheed Martin and others, viewed the State Department’s export licensing procedures as being too onerous.

According to the Cox Report, in January 1995 the Commerce Department began to work with other departments and agencies to transfer highly-sensitive, commercial communications satellites from the State Department’s U.S. Munitions List to the Commerce Department’s Control List.

On information and belief, the Commerce Department’s efforts were undertaken at the urging of members of the U.S. commercial communications satellite industry, including Hughes and Defendant Loral.

According to the Cox Report, this effort included a joint industry meeting in March 1995 with Commerce Department representatives hosted by C. Michael Armstrong, Chairman and Chief Executive Officer of Hughes. On information and belief, Defendant Schwartz and/or other representatives of Defendant Loral also participated in this meeting.

According to the Cox Report, also in March 1995 Armstrong submitted a report, "White Paper on Commercial Communication Satellites: Issues and Answers," to Anthony Lake, Assistant to the President for National Security Affairs.

According to the Cox Report, during 1995, the Clinton Administration was lobbied by members of the U.S. commercial communications satellite industry, including, on information and belief, Hughes and Defendant Loral, to have responsibility for commercial communications satellite export licensing transferred from the State Department to the Commerce Department.

According to the Cox Report, in September 1995, Armstrong sent a letter to Defendant Berger, who was then-Deputy Assistant to the President for National Security Affairs, stating: "Efforts by the State Department to keep commercial communications satellites on the State Department Munitions List should not be allowed to succeed."

According to the Cox Report, Armstrong had a follow-up meeting with Defendant Berger on September 20, 1995.

According to the Cox Report, Armstrong, Defendant Schwartz, and Daniel M. Tellep, Chairman and Chief Executive Officer of Lockheed Martin, sent a letter to President Clinton on October 6, 1995 that stated: "Continuing to license export of these technologies under the more stringent and cumbersome Munitions List places American companies at a distinct disadvantage in global markets."

On October 9, 1995, U.S. Secretary of State Warren Christopher decided to preserve the existing special export licensing procedures for U.S. commercial communications satellites.

In doing so, Secretary Christopher sided with the U.S. Department of Defense ("Defense Department"), Central Intelligence Agency, National Security Agency ("NSA") and some of his own advisors, who noted that sensitive technological secrets were embedded in U.S. commercial communications satellites that could jeopardize "significant military and intelligence interests."

On information and belief, Defendant Berger "began campaigning from the White House to reverse [Secretary Christopher’s October 9, 1995] decision." ("White House Memos to President Reveal Strategy to Shift Purview Over Satellite Sales, The New York Times, July 18, 1998).

On March 14, 1996, President Clinton overruled Secretary Christopher’s October 9, 1995 decision at the urging of the Commerce Department.

However, President Clinton’s decision to shift authority for licensing the export of U.S. commercial communications satellites from the State Department to the Commerce Department was not made final until November 5, 1996, the same day President Clinton and Vice-President Gore were reelected.

On information and belief, President Clinton overruled Secretary Christopher’s decision and transferred authority for export licensing from the State Department to the Commerce Department as a result of the substantial contributions Defendant Schwartz made and/or promised to make to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

Defendant Schwartz Secures Waivers From President Clinton

for Launching Loral Satellites in China

The Foreign Relations Authorization Act of 1990 and 1991, 22 U.S.C. § 2151 nt, enacted in the wake of the events of Tiananmen Square, suspended the export of any satellites of U.S. origin intended for launch in China.

Under the Foreign Relations Authorization Act of 1990 and 1992, a suspension may be lifted for a particular launch if the President reports to Congress that it is in the national interest to do so.

Consequently, in addition to an export licenses, any company wishing to launch a U.S. satellite aboard a Chinese rocket had to obtain a waiver from the President as well.

On February 6, 1996, President Clinton signed a waiver allowing Defendant Loral to launch a U.S. commercial communications satellite from China, despite evidence that China was exporting nuclear and missile technology to Pakistan and Iran, among other nations. This launch ultimately took place on August 19, 1997.

On July 9, 1996, President Clinton signed another waiver allowing Defendant Loral to launch other U.S. commercial communications satellites from China for its "Globalstar" cellular telephone network. These launches were scheduled to take place in 1998 and 1999. However, the launch site was later changed to Russia.

On information and belief, President Clinton signed these waivers allowing the launch of Defendant Loral’s satellites in China as a result of the substantial campaign contributions Defendant Schwartz made and/or promised to make to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

Defendant Loral Transfers Highly Sensitive, National

Security Information to the Chinese

On February 15, 1996, a Chinese Long March 3B Rocket carrying a $200 million commercial communications satellite manufactured by Defendant Loral failed in midflight.

According to the Cox Report, the satellite on board the failed rocket was an Intelsat 708 satellite manufactured by Defendant Loral for Intelsat, the world’s largest commercial satellite communications services provider. In October 1988, Intelsat had awarded a contract to Loral to manufacture several satellites under a program known as Intelsat VII. That contract had a total value of nearly $1 billion dollars.

On information and belief, the failed launch had been undertaken by China Great Wall Industry Corporation, a state-controlled missile, rocket and launch provider, with reported ties to Chinese intelligence services.

The satellite on board the Chinese Long March rocket contained an encryption device on a circuit board that controls the satellite’s communications and movements in space.

On information and belief, similar encryption devices are used in U.S. defense satellites, and, consequently, the devices are highly classified secrets of the U.S. Government.

On information and belief, the circuit board from the highly classified encryption device in the satellite that was destroyed during the February 15, 1996 launch was missing when the Chinese returned debris from the explosion to U.S. authorities, even though a control box containing the circuit board was recovered intact.

People’s Liberation Army soldiers and other Chinese agents reportedly sorted through the debris while U.S. officials were kept away from the crash site for five (5) hours.

U.S. officials have publicly stated that they suspect the Chinese authorities took the board.

After the crash, NSA reportedly changed the encoded algorithms used by U.S. satellites.

According to the Cox Report, China Great Wall Industry Corporation created two groups whose members were Chinese nationals to investigate the cause of the Long March 3B launch failure.

According to the Cox Report, on February 27, 1996, China Great Wall Industry Corporation reported that the Long March 3B launch failure was caused by a failure in the inertial measurement unit within the control system of the rocket. The inertial measurement unit is a component that provides an attitude reference for the rocket, basically telling it which way is up. This was not the true cause of the failure, however.

According to the Cox Report, in early April 1996, China Great Wall Industry Corporation invited both Defendant Loral and Hughes to participate in an Independent Review Committee ("IRC") that would review the Chinese launch failure investigation.

According to the Cox Report, Defendant Loral was aware from the start of the IRC meetings that it did not have a license for the IRC activity.

On information and belief, Defendant Loral and Hughes participated in at least two (2) rounds of IRC meetings.

According to the Cox Report, IRC meetings were not attended by any U.S. government monitors, as almost certainly would have been required had there been an export control license.

According to the Cox Report, Defendant Loral and Hughes were well aware that a State Department license was required to provide assistance related to the guidance system of a Chinese rocket. Neither company applied for nor obtained the required license. Defendant Loral was warned of the need for a license at the time it agreed to participate in the investigation, but took no action.

According to the Cox Report, Defendant Loral and Hughes also failed to properly brief participants in the failure investigation of U.S. export requirements, failed to monitor the investigation as it progressed, and failed to take adequate steps to ensure that no prohibited information was passed to the Chinese.

According to the Cox Report, Defendant Loral and Hughes submitted lengthy written materials analyzing the cause of the guidance system failure to the Chinese and other foreign nationals.

As reported by both The New York Times and The Washington Post, Defendant Loral faxed a twenty-five (25) page memorandum to the Chinese summarizing the conclusions of an independent review panel about the causes of the accident. (Elaine Sciolino and Jeff Gerth, "Scientist Who Led Missile Review Promised Help to China," The New York Times, June 6, 1998; John Minz, "Technology Transfer Probe is Widened," The Washington Post, June 24, 1998; John Minz, "Testimony: Export Watchdog Neutered," The Washington Post, June 26, 1998).

According to the Cox Report, Defendant Loral and Hughes also engaged in technical discussions, including discussions about the details and causes of the guidance system failure, that were most certainly recorded by the Chinese.

According to the Cox Report, neither Defendant Loral nor Hughes disclosed to export control officers of the U.S. Government their unlicensed activities until after they were contacted by U.S. Government licensing officials demanding an explanation for their conduct. The U.S. Government officials became aware of the improper activities through an article in a widely-read industry publication. This article also came to Defendant Loral’s attention prior to its disclosure to the U.S. Government.

According to the Cox Report, an aborted third round of IRC was scheduled for June 1996. However, the U.S. Government, upon learning of the IRC’s activities, issued a cease and desist letter to both Defendant Loral and Hughes, ordering the companies to stop all activity in connection with the failure review. The letter also requested each company to disclose the facts related to, and circumstances surrounding, the IRC.

According to the Cox Report, in August 1996 the Defense Department prepared a classified assessment of the IRC materials. That assessment reported that the Defense Department would have recommended against issuing a license for the sharing of technical information with the Chinese by Defendant Loral and Hughes.

According to the Cox Report, the August 1996 Defense Department assessment cited 18 violations that it believed had occurred during the IRC’s exchange of information with the Chinese.

According to the Cox Report, Defendant Loral and Hughes identified for the Chinese the true cause of the failure as a particular element within the Long March 3B’s rocket guidance system. As set forth in the Cox Report, the 1996 Defense Department assessment states:

It is likely that the all-Chinese Failure Analysis Team pursued recommendations made by the Independent Review Committee in its draft report . . . and that the pursuit of these recommendations directly resulted in the Chinese team finding the correct cause of failure in the Long March 3B guidance system . . . .

As set forth in the Cox Report, the 1996 Defense Department assessment also states with regard to the IRC’s assisting the Chinese to learn the true cause of the failure:

Evidence suggests that the IRC very likely led the Chinese to discover the true failure of the Long March 3B guidance platform.

Stating it simply, it can be shown that before [the] ICR, the Chinese team had narrowed the most-probable failure scenario to a particular area of the inertial platform (inner frame gimbal).

It can also be shown that in the IRC draft report delivered to China, that the IRC pointed out that the failure could also be in two other places (namely the follow-up frame gimbal or in an open-loop feedback path) and stated that China should explain some as-yet unexplained data output (concerning the follow-up frame); [the] IRC went on to recommend that China perform tests that would prove/disprove all three scenarios.

It can be shown that after the IRC report (and suspension of IRC activities), the Chinese team performed specific tests for these scenarios, and that shortly after the IRC report, these tests resulted in the Chinese team ruling out their original failure scenario (the inner frame gimbal) and resulted in isolating the follow-up frame gimbal as the source of the failure.

According to the Cox Report, the Defense Department’s 1996 assessment also concluded that the IRC’s work is likely to lead to the improved reliability of China’s ballistic missiles:

The [IRC] second meeting minutes provides two alternative causes for the guidance system failure that were previously ruled out or not cited by [the China Academy of Launch Vehicle Technology].

Furthermore, [the IRC] recommends specific testing to confirm/deny these alternative causes that otherwise would likely not have been done by China.

If true failure turns out to be one of these alternatives, then the [IRC] will have solved the guidance problem for [the China Academy of Launch Vehicle Technology] and possibly prevented a future failure of a [rocket] or developmental missile.

According to the Cox Report, on March 25, 1997, the State Department, after considering the view of other agencies, reported its assessment of the IRC’s materials. The State Department report stated: [State] believes information passed to China . . . could significantly improve the manufacturing, production, reliability and maintainability of the Long March 3B guidance system.

Both the State Department’s intelligence arm and the Air Force’s National Air Intelligence Center have concluded that "United States national security has been harmed" because of Defendant Loral’s unauthorized release of sensitive technology to the Chinese.

According to the Cox Report, the Defense Department’s Defense Technology Security Administration ("DTSA") issued a classified assessment of the ICR’s activities on May 16, 1997. A portion of that classified report, as quoted in the Cox Report, states:

Loral and Hughes committed a serious export control violation by virtue of having performed a defense service without a license in the course of conducting an investigation for China of the failure of the February 1996 launch of the Long March 3B.

The defense service consisted of a full range of investigatory, engineering and corrective analyses to assist the Chinese in identifying the root cause of the failure and corrective measures.

The significant benefits derived by China from these activities are likely to lead to improvements in the overall reliability of their launch vehicles [i.e., rockets] and ballistic missiles and in particular their guidance systems.

According to the Cox Report, in July 1998 a U.S. government interagency team conducted a review of the IRC’s activities and reported the following:

· The actual cause of the Long March 3B failure may have been discovered more quickly by the Chinese as a result of the IRC’s report.

· Advice given to the Chinese by the IRC could reinforce or add vigor to the Chinese’s design and test practices.

· The technical issue of greatest concern was the exposure of the Chinese to a Western diagnostic process.

According to the Cox Report, the team members believed, more important still, that the exposure to the diagnostic test process outlined by Defendant Loral and Hughes could improve Chinese pre-flight and post- flight failure analysis for their ballistic missile programs. This, in turn, could increase future ballistic missile reliability.

Defendant Schwartz Secures Additional Waiver from President Clinton,

Obtains an Export License from the Commerce Department and

Thwarts Criminal Prosecution for Prior Transfer of

Sensitive Satellite Encryption Data to China

According to the Cox Report, the Defense Department recommended, based on the 1997 DTSA assessment, that the conduct of Defendant Loral and Hughes be referred to the U.S. Department of Justice ("Justice Department") for possible criminal prosecution.

In 1997, the Justice Department began a federal grand jury investigation into Defendant Loral’s unauthorized release of highly classified, national security information to the Chinese.

In early 1998, the Clinton Administration began consideration of whether President Clinton should grant another waiver allowing the launch of a Chinasat-8 satellite manufactured by Defendant Loral aboard a Chinese rocket.

According to a February 12, 1998 memorandum to President Clinton from Defendant Berger, who had since become Assistant to the President for National Security Affairs, Larry Stein, the White House Congressional Liaison, and Daniel K. Tarullo, then-Assistant to the President for International Economic Policy, the Justice Department reportedly advised President Clinton that granting a waiver would have a significant adverse impact on any prosecution arising from its pending investigation of Defendant Loral:

In this particular instance, however, the Criminal Division of the Justice Department has cautioned that a national-interest waiver in this case could have a significant adverse impact on any prosecution that might take place, based on a pending investigation of export violations by SS/L. Justice is investigating SS/L’s unauthorized transfer of defense services to the Chinese during their joint inquiry into an explosion of a Chinese launch rocket carrying an SS/L satellite in 1996 -- a transfer that could have contributed to the Chinese ballistic missile program.

SS/L acknowledges that an unauthorized transfer of technological information took place, but Justice has not decided whether it will take criminal action against SS/L.

Justice believes that a jury would not convict once it learned that the President had found SS/L’s Chinasat 8 project to be in the national interest. We will take the position that this waiver does not exonerate or in any way prejudge SS/L with respect to its prior unauthorized transfers to China. Nevertheless, if Justice is correct on this matter, the proposed waiver might be criticized for letting SS/L off the hook on criminal charges for its unauthorized assistance to China’s ballistic missile program.

According to the Cox Report, a transmittal memorandum dated February 18, 1998, which accompanied a decision memorandum for President Clinton, stated:

Chuck Ruff, the counsel to the President, notes that there have been extensive discussions with Justice on this matter.

The Department [of Justice] realizes the potential adverse impact on a potential criminal prosecution but has chosen not to oppose the waiver.

Therefore, in balancing national security and criminal justice interests, Chuck agrees that the balance, under these special circumstances, is properly struck by granting the waiver.

According to the Cox Report, Robert S. Litt, Principal Associate Deputy Attorney General in the Justice Department, recalls that he had two conversations with Charles F. C. Ruff, the Counsel to the President, on this matter. Litt also indicated that there were only one or more conversations between Mark M. Richard, Deputy Assistant Attorney General in the Criminal Division, and James E. Baker, the Special Assistant to the President and Legal Adviser to the National Security Council. Litt does not characterize these conversations as "extensive."

According to the Cox Report, Litt says, regarding whether the Justice Department had chosen not to oppose the waiver:

Certainly the Department was put on notice that there was a waiver application, and in that sense, we had an opportunity to weigh in.

On the other hand, as I said, I didn’t believe that we were being asked for our views on whether or not the waiver should be granted as a matter of policy.

In addition to co-authoring the February 12, 1998 memorandum to President Clinton, Defendant Berger was, on information and belief, highly instrumental in securing a waiver for the Chinasat-8 satellite for Defendant Loral and effectively nullifying any Justice Department criminal investigation and prosecution. A February 13, 1998 letter to Defendant Berger from Thomas B. Ross, Vice President of Government Relations at Defendant Loral states:

I recognize that you are bearing more than the usual load of responsibilities at this time, and I would not be raising this issue if it were not time urgent for us.

We are told that the request for a waiver to permit Loral to use the China Long March rocket for a satellite launch is in the West Wing, perhaps on the President’s desk. If a decision is not forthcoming in the next day or so, we stand to lose the contract. In fact, even if the decision is favorable, we will lose substantial amounts of money with each passing day.

Bernard Schwartz had intended to raise this issue with you at the Blair dinner, but missed you in the crowd. In any event, we would greatly appreciate your help in getting [a] prompt decision for us.

On February 18, 1998, President Clinton signed the waiver, allowing the Chinasat-8 satellite manufactured by Defendant Loral to be launched in China and effectively nullifying any Justice Department criminal investigation and prosecution.

On March 23, 1998, the Commerce Department granted Defendant Loral an export license allowing the Chinasat-8 satellite manufactured by Defendant Loral to be launched in China.

On information and belief, President Clinton signed the waiver allowing the launch and effectively nullifying any Justice Department criminal investigation and prosecution as a result of the substantial contributions Defendant Schwartz had made and/or promised to make to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

On information and belief, the Commerce Department granted Defendant Loral an export license allowing Defendant Loral to export the Chinasat-8 satellite for launch in China as a result of the substantial contributions Defendant Schwartz had made and/or promised to make to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws.

As a Result of Defendant Schwartz’ Contributions and Resultant Breaches of National

By engaging in the acts alleged herein, Defendant Schwartz has caused Defendant Loral to be implicated in a major political scandal, violations of federal law, and breaches of U.S. national security, and has damaged Defendant Loral’s reputation throughout the nation and the world.

Defendant Loral has received substantial adverse public attention and is the subject of both criminal and congressional investigations, which, in turn, has caused it to expend substantial corporate and shareholder assets defending itself. Defendant Loral has also been placed at risk of substantial civil and criminal liability.

In May 1998, it was publicly announced that the Justice Department’s so-called "Campaign Finance Task Force" had begun investigating the contributions made by Defendant Schwartz to the DNC and other entities affiliated with the Democrats and the Democratic Party, and the waivers granted by President Clinton.

In the May 17, 1998 edition of The Washington Post, it was publicly reported that the Justice Department’s campaign finance task force

is looking at allegations by congressional Republicans that the administration issued a disputed waiver for a satellite deal with China to a U.S. aerospace company [Defendant Loral] because its chief executive [Defendant Schwartz] is a major Democratic contributor.

On May 21, 1998, the U.S. House of Representatives passed a resolution urging the Clinton Administration to cooperate with congressional investigations into Defendant Loral’s unauthorized transfer of technology to China and campaign fundraising practices.

You have major concessions made by the President on technology transfers which adversely effect national security. These transfers are made at a time exactly when these enormous contributions were being made . . . . It raises a very substantial question.

On May 24, 1998, Defendant Schwartz himself appeared on the Sunday morning talk show circuit in an attempt to deflect criticism away from his conduct and the conduct of Defendant Loral.

On May 25, 1998, renowned columnist William Safire wrote an article in The New York Times entitled "The China Connection" that reported:

Think of ‘the China connection’ as two-tracked. One track is the purchase of White House influence by U.S. aerospace corporations eager to sell advanced missile technology to China. The second is the plan by China to affect Clinton policy by directing money through various fronts into the Clinton-Gore campaign.

First track first. After a mere $100,000 investment in the Democratic National Committee in 1994, Bernard Schwarz, C.E.O. of Loral Space, was rewarded with a Ron Brown trip to Beijing that led to a $250 million telecommunications deal.

When one of China’s missiles launching a Loral satellite failed, Loral scientists -- without telling our government -- prepared a 200 page report for China to improve its missile guidance. The Pentagon objected; the C.I.A. chimed in with an estimate later that China’s nuclear missiles were aimed at 13 U.S. cities. China’s targeting had been made more accurate with Loral’s unauthorized help.

This caused the Justice Department to launch a criminal investigation. That might have slowed down any ordinary company’s future approvals to launch satellites on Chinese rockets, but Loral’s Schwartz had purchased two tickets to the Clinton Ball.

One ticket was Loral’s status as the largest contributor to the Democratic campaigns. The other was a shrewd recruitment: in May 1995, Schwartz hired the National Security Council’s press spokesman, Tom Ross -- who had worked closely for a year with Samuel Berger, now national political-security adviser -- to be Loral’s spokesman.

Ross’ urgent calls to his former associate, Gary Samore, the complaisant nonproliferation man at the N.S.C., moved the approval process along.

Just as Loral and Ron Brown had been able to get Clinton to overturn a State Department disapproval years before, the company with the contacts was easily able to overcome State’s warning to the N.S.C. that Loral’s actions were ‘criminal, likely to be indicted, knowing and unlawful.’

Thus did Clinton’s favor to contributor Bernard Schwartz undermine Justice’s case. White House Counsel Charles Ruff dismissed the objections of prosecutors because Janet Reno did not make the call herself. (Her deputy, Eric Holder, is now trying to protect the White House by claiming that prosecutors were mistaken about their case being weakened.)

On June 27, 1998, The New York Times published portions of the Defense Department’s May 16, 1997 classified DTSA assessment, which found that Defendant Loral’s unauthorized release of sensitive technology to the Chinese gave rise to at least three (3) "major" violations of U.S. national security, three (3) "medium" violations, and twelve (12) "minor" infractions.

As published in this same June 27, 1998 edition of The New York Times, the Defense Department’s DTSA assessment concluded: "The significant benefits derived by China from these activities are likely to lead to improvements in the overall reliability of their space-launched vehicles and ballistic missiles, and, in particular, their guidance systems."

In June 1998, the Senate Foreign Relations Committee and the Senate Government Affairs Committee conducted hearings into "Chinagate."

In June 1998, the House of Representatives’ National Security Committee and International Relations Committee also conducted joint hearings into "Chinagate."

In June 1998, the House of Representatives also established a special Select Committee on U.S. National Security and Military/Commercial Concerns With the Peoples’ Republic of China to look into "Chinagate." This Select Committee was chaired by Rep. Christopher Cox.

In June and July 1998, the Senate Subcommittee on International Security, Proliferation and Federal Services conducted hearings into the Commerce Department’s satellite export control procedures.

On May 25, 1999, Rep. Cox’s Select Committee issued a three (3) volume, declassified version of its Final Report, which has been widely published and excerpted from, and is available on the Internet.

The declassified version of the Cox Report specifically notes that Defendant Schwartz was the largest individual donor to the Democratic Party in 1997.

The declassified version of the Cox Report also specifically notes Defendant Loral’s financial interest in assisting the Chinese to develop their missile technology:

Loral and Hughes had important commercial interests in the PRC when they engaged in the 1996 failure investigation. These interests included future sales of satellites to the PRC or to parties serving the PRC market, and reducing the cost and improving the safety of launching satellites in the PRC.

The declassified version of the Cox Report reached the following conclusions about the harm to national security that resulted from Defendant Loral’s actions:

In 1996, Loral and Hughes showed the PRC how to improve the design and reliability of the guidance system used in the PRC’s newest Long March rocket.

Loral’s and Hughes’ advice may also be useful for design and improved reliability of elements of future PRC ballistic missiles.

Loral and Hughes acted without the legally required license, although both corporations knew that a license was required.

* * *

Loral and Hughes provided valuable additional information that exposed the PRC to Western diagnostic processes that could lead to improvements in the reliability of all PRC ballistic missiles.

As a result of these criminal and congressional investigations and the substantial adverse publicity Defendant Loral has received, Defendant Loral has suffered substantial harm to its good will, reputation and business interests and has been placed at risk of substantial civil and criminal liability.

On information and belief, Defendant Loral has been forced to expend substantial corporate assets in responding to these criminal and congressional investigations, and to the substantial adverse publicity it has received.

On information and belief, Defendant Schwartz made illegal contributions from Defendant Loral’s laundered corporate assets, and has otherwise caused Defendant Loral’s corporate assets to be wasted by reason of the matters alleged herein.

COUNT I

(Breach of Fiduciary Duty -- Defendant Schwartz)

Plaintiffs reallege paragraphs 1 through 205 as if fully set forth herein.

As Chairman and CEO of Defendant Loral, Defendant Schwartz owed Defendant Loral and its shareholders fiduciary duties to act in their best interests and not to waste corporate assets.

Defendant Schwartz breached the fiduciary duties he owed to Defendant Loral and its shareholders and/or wasted corporate assets by: (a) unlawfully making contributions to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party in exchange for favorable treatment from the Clinton Administration, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws; (b) causing Defendant Loral’s corporate assets to be used for unlawful ends; (c) causing Defendant Loral to be implicated in unlawful conduct and/or violations of national security; and (d) allowing and/or failing to prevent the unauthorized transfer of sensitive satellite encryption and other technology to China.

Because Defendant Schwartz’ conduct was unlawful and/or resulted in unlawful acts, the decision to engage in such conduct was not a permissible exercise of reasonable business judgment.

Defendant Schwartz’ conduct was willful and intentional, or undertaken with reckless disregard for the best interests and welfare of Defendant Loral and its shareholders.

As a proximate result, Defendant Loral and the shareholders of Defendant Loral have suffered and continue to suffer substantial damages, including but not limited to being subject to criminal and congressional investigations, and the subsequent loss of corporate and shareholder resources in defending itself in these investigations, potential civil and criminal liability, loss of Defendant Loral’s good will and reputation, harm to Defendant Loral’s business interests, and other wasting of corporate and shareholder assets.

WHEREFORE, Plaintiffs request that judgment be entered against Defendant Schwartz, individually and in his capacity as Chairman and CEO of Defendant Loral, for an accounting and restitution to Defendant Loral of the $36 million bonus and for actual, compensatory and punitive damages, an award of attorneys’ fees and costs to Plaintiffs and Defendant Loral, injunctive relief, and such other relief as the Court deems appropriate.

COUNT II

(Negligence -- Defendant Schwartz)

Plaintiffs reallege paragraphs 1 through 211 as if fully set forth herein.

As Chairman and CEO of Defendant Loral, Defendant Schwartz owed Defendant Loral and its shareholders a duty to exercise reasonable care and prudence in the management, supervision, operation and control of Defendant Loral. This duty to exercise reasonable care and prudence includes the duty not to waste corporate assets.

Defendant Schwartz breached the duties he owed to Defendant Loral and its shareholders and/or wasted corporate assets by: (a) unlawfully making contributions to the DNC, DSCC, DCCC and other entities affiliated with the Democrats and the Democratic Party in exchange for favorable treatment from the Clinton Administration, in violation of 18 U.S.C. §§ 201, 371 and 600, among other applicable laws; (b) causing Defendant Loral’s corporate assets to be used for unlawful ends; (c) causing Defendant Loral to be implicated in unlawful conduct and/or violations of national security; and (d) allowing and/or failing to prevent the unauthorized transfer of sensitive satellite encryption and other technology to China.

Defendant Schwartz’ conduct was willful and intentional, or undertaken with reckless disregard for the best interests and welfare of Defendant Loral and its shareholders.

As a proximate result, Defendant Loral and the shareholders of Defendant Loral have suffered and continue to suffer substantial damages, including but not limited to being subject to criminal and congressional investigations, and the subsequent loss of corporate and shareholder resources in defending itself in these investigations, potential civil and criminal liability, loss of Defendant Loral’s good will and reputation, harm to Defendant Loral’s business interests, and other wasting of corporate and shareholder assets.

WHEREFORE, Plaintiffs request that judgment be entered against Defendant Schwartz, individually and in his capacity as Chairman and CEO of Defendant Loral, for an accounting and restitution to Defendant Loral of the $36 million bonus and for actual, compensatory and punitive damages, an award of attorneys fees’ and costs to Plaintiffs and Defendant Loral, injunctive relief, and such other relief as the Court deems appropriate.

COUNT III

(Unjust Enrichment -- Defendants DNC, DSCC and DCCC )

Plaintiffs reallege paragraphs 1 through 216 as if fully set forth herein.

The unlawful contributions made by Defendant Schwartz to Defendants DNC, DSCC and DCCC, which on information and belief were reimbursed to Defendants Schwartz from Defendant Loral’s corporate funds, were a gratuitous gift of Defendant Loral’s assets, made with no legal justification or excuse.

Defendants DNC, DSCC and DCCC were thereby unjustly enriched, and received the contributions with the knowledge that the contributions were unlawful and wrongfully being made at the expense of Defendant Loral and its shareholders.

WHEREFORE, Plaintiffs request that judgment be entered against Defendant DNC, DSCC and DCCC, jointly and severally, for an accounting and restitution to Defendant Loral for all contributions made by Defendant Schwartz and for actual, compensatory and punitive damages, an award of attorneys’ fees and costs to Plaintiffs and Defendant Loral, injunctive relief, and such other relief as the Court deems appropriate.

COUNT IV

(Civil Conspiracy -- All Defendants)

Plaintiffs reallege paragraphs 1 through 219 as if fully set forth herein.

On information and belief, Defendants Schwartz, DNC, DSCC, DCCC, William Jefferson Clinton, Hillary Rodham Clinton, Gore, Ickes, Moss, Berger, Herman, Rosen, McAuliffe, and Huang, and Defendants John and Jane Does Nos. 1-10 and other currently unknown individuals agreed, tacitly or explicitly, to participate in a common scheme to unlawfully provide taxpayer-financed government services and/or favorable treatment to Defendant Loral from the Clinton Administration in exchange for campaign contributions, in breach of Defendant Schwartz’ fiduciary and other duties to Defendant Loral and its shareholders.

On information and belief, Defendants Schwartz, DNC, DSCC, DCCC, William Jefferson Clinton, Hillary Rodham Clinton, Gore, Ickes, Moss, Berger, Herman, Rosen, McAuliffe, and Huang, and Defendants John and Jane Does Nos. 1-10 and other currently unknown individuals performed one or more unlawful acts, or performed one or more lawful acts in an unlawful manner, in furtherance of this common scheme.

These unlawful acts were not within the scope of Defendants’ lawful authority.

Defendants’ conduct was willful and intentional, or undertaken with reckless disregard for the rights of Defendant Loral and its shareholders.

As a proximate result, Defendant Loral and the shareholders of Defendant Loral have suffered and continue to suffer substantial damages, including but not limited to being subject to criminal and congressional investigations, and the subsequent loss of corporate and shareholder resources in defending itself in these investigations, potential civil and criminal liability, loss of Defendant Loral’s good will and reputation, harm to Defendant Loral’s business interests, and other wasting of corporate and shareholder assets.

WHEREFORE, Plaintiffs request that judgment be entered against all Defendants, jointly and severally, for an accounting and restitution to Defendant Loral of the $36 million bonus and for actual, compensatory and punitive damages, an award of attorneys’ fees and costs to Plaintiffs and Defendant Loral, injunctive relief, and such other relief as the Court deems appropriate.

COUNT V

(Violations of the Racketeering Influenced and Corrupt Organizations Act,

18 U.S.C. § 1961 et seq. -- All Defendants)

Plaintiffs reallege paragraphs 1 through 225 as if fully set forth herein.

Defendant Loral is an enterprise within the meaning of 18 U.S.C. § 1961(4), the activities of which affect interstate commerce.

In order to secure benefits and other favorable treatment for Defendant Loral from the Clinton Administration, Defendant Schwartz made the following series of unlawful contributions to the DNC and other organizations affiliated with the Democrats and Democratic Party, which directly or indirectly benefitted President Clinton and Vice-President Gore:

(a) in June 1994, Defendant Schwartz made a $100,000 contribution to the DNC;

(b) on April 24, 1995, Defendant Schwartz paid $25,000 to the DNC;

(c) on June 30, 1995, Defendant Schwartz paid $75,000 to the DNC;

(d) on September 30, 1995, Defendant Schwartz paid $20,500 to the DNC;

(e) on November 28, 1995, Defendant Schwartz paid $100,000 to the DNC;

(f) on June 10, 1996, Defendant Schwartz paid $100,000 to the DNC;

(g) on October 18, 1996, Defendant Schwartz paid $70,000 to the DNC;

(h) on December 20, 1996, Defendant Schwartz paid $6,000 to the DNC;

(i) on June 27, 1997, Defendant Schwartz paid $100,000 to the DNC;

(j) on December 23, 1997, Defendant Schwartz paid $50,000 to the DNC;

(k) on January 21, 1998, Defendant Schwartz paid $30,000 to the DNC;

(l) on March 2, 1998, Defendant Schwartz paid $25,000 to the DNC;

(m) on April 22, 1998, Defendant Schwartz paid $100,000 to the DNC;

(n) on June 30, 1995, Defendant Schwartz paid $20,000 to the DSCC;

(o) on September 30, 1995, Defendant Schwartz paid $20,500 to the DSCC;

(p) on February 15, 1996, Defendant Schwartz paid $15,000 to the DSCC;

(q) on April 24, 1996, Defendant Schwartz paid $50,000 to the DSCC;

(r) on July 31, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(s) on September 16, 1996, Defendant Schwartz paid $30,000 to the DSCC;

(t) on September 20, 1996, Defendant Schwartz paid $20,000 to DCCC;

(u) on October 16, 1996, Defendant Schwartz paid $10,000 to the DSCC;

(v) on October 24, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(w) on January 31, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(x) on April 25, 1997, Defendant Schwartz paid $5,000 to the DCCC;

(y) on July 14, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(z) on October 27, 1997, Defendant Schwartz paid $1,000 to the DCCC;

(aa) on December 15, 1997, Defendant Schwartz paid $10,000 to the DSCC;

(bb) on December 19, 1997, Defendant Schwartz paid $50,000 to the DCCC;

(cc) on or about May 21, 1998, Defendant Schwartz reportedly contributed $217,000 to the Democratic Leadership Conference, a think tank associated with President Clinton; and

(dd) on August 14, 1998, Defendant Schwartz paid $100,000 to the DCCC.

The repeated nature and common purpose of these unlawful predicate acts -- to secure benefits and other favorable treatment from the Clinton Administration in exchange for campaign contributions, in violation of 18 U.S.C. § 201 -- constitute a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5).

Because the purpose of these repeated predicate acts was to secure benefits and other favorable treatment for Defendant Loral, Defendant Schwartz thus managed the affairs of Defendant Loral through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c).

Likewise, Defendants DNC, DSCC, DCCC, William Jefferson Clinton, Hillary Rodham Clinton, Gore, Ickes, Moss, Berger, Herman, Rosen, McAuliffe, and Huang, and Defendants John and Jane Does Nos. 1-10, and other currently unknown individuals, conspired with Defendant Schwartz to manage the affairs of Defendant Loral through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d).

These unlawful acts were not within the scope of Defendants’ lawful authority.

Defendants’ conduct was willful and intentional, or undertaken with reckless disregard for the rights of Defendant Loral and its shareholders.

As a proximate result of Defendant Schwartz’ violations of 18 U.S.C. § 1962(c) and of all Defendants’ violations of 18 U.S.C. § 1962(d), Defendant Loral and the shareholders of Defendant Loral have suffered and continue to suffer substantial injury to their business and property, including but not limited to, being subject to criminal and congressional investigations, and the subsequent loss of corporate and shareholder resources in defending itself in these investigations, potential civil and criminal liability, loss of Defendant Loral’s good will and reputation, harm to Defendant Loral’s business interests, and other wasting of corporate and shareholder assets.

WHEREFORE, Plaintiffs request that judgment be entered against all Defendants, jointly and severally, for an accounting and restitution to Defendant Loral of the $36 million bonus and for actual and compensatory damages, treble damages, an award of attorneys’ fees and costs to Plaintiffs and Defendant Loral, injunctive relief, and such other relief as the Court deems appropriate.

Plaintiffs request trial by jury.

Respectfully submitted,

JUDICIAL WATCH, INC.

__________________________

Larry Klayman, Esq.

D.C. Bar No. 334581

__________________________

Paul J. Orfanedes, Esq.

D.C. Bar No. 429713

__________________________

Deborah E. Berliner, Esq.

D.C. Bar No. 422238

__________________________

Brett M. Wood, Esq.

D.C. Bar No. 142299

501 School St., S.W.

Suite 725

Washington, DC 20024

(202) 646-5172

Attorneys for Plaintiffs

I, William Meng, hereby verify, under penalty of perjury, that I am a plaintiff in the above-entitled action, that I have read the foregoing Amended Complaint and know the contents thereof, and that those matters which concern me personally are true to my own knowledge, and that all other matters are alleged on information and belief as gathered from the public domain. Executed on this 22nd day of July, 1999 in Washington, D.C.

William Meng

I, S. S. Jones, Jr., hereby verify, under penalty of perjury, that I am a plaintiff in the above-entitled action, that I have read the foregoing Amended Complaint and know the contents thereof, and that those matters which concern me personally are true to my own knowledge, and that all other matters are alleged on information and belief as gathered from the public domain. Executed on this 22nd day of July, 1999 in Washington, D.C.

S. S. Jones, Jr.

I, Roy S. Gillinson, M.D., Plaintiff above-named, have read the foregoing Amended Complaint and know the contents thereof, and the same is true of my own knowledge, except to the extent that allegations therein consist of legal conclusions, or are made on information and belief, in which case, I believe those allegations to be true. Sworn to under penalty of perjury this 21st day of July, 1999 in Washington, D.C.